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Norwegian Air Shuttle... Still Kicking

On Thursday, Norwegian Air's shareholders approved Rescue Plan #173 for the airline. Once again, current shares will be diluted as Norwegian attempts to trade debt for equity and raise additional capital through a new share offering while taking advantage of creditor protection granted in Ireland and Norway. Why do investors continue to subscribe to new share offerings by the airline? I have no idea.

Interestingly, CEO Jacob Schram said that the board of directors is debating the future of long-haul transatlantic flights, but no decision has been made with regard to whether these will be part of a smaller post-"bankruptcy" Norwegian Airlines.

Reuter's coverage: https://www.reuters.com/article/norwegianair-restructuring/update-1-norwegian-air-shareholders-back-restructuring-plan-idUKL8N2IX2M6
Simple Flying's coverage: https://simpleflying.com/norwegian-rescue-plan-approved/

Posted by
7005 posts

A black hole is a place in space where gravity pulls so much that even light can not get out.

Alitalia and Norwegian air are the financial equivalent to cash. It goes in but never comes out.

When you find yourself in a hole, the first rule is 'stop digging'.

Posted by
4362 posts

Norwegian worked ok as a value operator within Europe. The trouble started once it started flying longer routes such as transatlantic. I recall the CEO of EasyJet being interviewed when Norwegian started flying to America. He said their policy was that all flight crew returned to their base every night and they didn’t have hotel bills and double staff which Norwegian would incur flying longer routes. Looks like he was right.

Posted by
1593 posts

Why do investors continue to subscribe to new share offerings by the
airline? I have no idea.

I've been asking myself the same question. There must be better ways to invest your money. And if you feel that you have more money than you need, why not give some to a charity instead?

After a 100:1 reverse stock split their shares are back at a reasonable price again, so maybe they feel they have too few shares in total?

Posted by
368 posts

According to their website they still have flights planned from San Francisco non stop to London and also Copenhagen starting in late March. Wonder if they will get cancelled as we get closer to time.

Posted by
2237 posts

The rumor on the street is that there are multiple board members who are strongly in favor of eliminating transatlantic long-haul routes and returning Norwegian to a primarily Scandinavian airline with some reach into the rest of Europe. I saw an article in which one airline analyst commented that Norwegian probably cannot create a credible reorganization plan that will convince Irish courts the airline can be profitable without eliminating transatlantic flights.

Posted by
6523 posts

They just had a 3 day sale on transatlantic routes for summer e.g. $154 one way Boston to London; does that mean anything?

Posted by
7005 posts

They just had a 3 day sale on transatlantic routes for summer e.g. $154 one way Boston to London; does that mean anything?

Sounds like a desperate move to raise (short term) cash.

I think taking that $154 to Vegas gives you a better chance of getting something in return.

My $0.02

Posted by
2237 posts

They just had a 3 day sale on transatlantic routes for summer e.g.
$154 one way Boston to London; does that mean anything?

Norwegian is now advertising Boston-London for $135 one way. San Francisco-London is $170 one way. The sale is active Dec 27 through Jan 10.
https://www.norwegian.com/us/offers/new-year/

I think that means the airline is doubling down on a fare structure that has pushed it to the edge of insolvency about 17 times in the last 3 years.

Or it is probing for the price point US consumers are willing to pay right now for a transatlantic flight as part of their analysis of whether they can make transatlantic flights profitable and whether they should be in that business.

Checking the booking options, the $135 fares for Boston start in September.

It's hard to imagine that any credit card company is going to advance Norwegian the dollars on air fares sold until the flights actually operate, so I don't think the sale helps with cash flow unless they the airline has credit card acquirers that are charging massive fees to settle charges before flights operate (which improves cash flow but further hurts profitability).

It's interesting to note that the plan in May was to pull back to something like NY and LA flights. The sale destinations for London have crept up to NY, Boston, Orlando, Miami, Los Angeles, and San Francisco. What's even more interesting is that Austin-London and Denver-London flights are available to book for summer, too.

Posted by
33 posts

Just got the notification about no more long haul flights...super bummed. Flew them to Paris and London and both times the flights were great, the comfortable reclining seats were worth the money...now I'll have to roll the dice with Air France and their seemingly yearly round of strikes! And everyone will be paying more too...